Management exam 2

Horizontal diversification

Growth strategy in which a company seeks to add to its existing product lines with improved versions of the originals or with new products that add value and appeal to its current customers

Vertical integration

Strategy that allows a company to streamline its operations by taking direct ownership of various stages of it production process rather than relying on external contractors or suppliers

transitional

When a company has local-led operations in different markets and located specific value chain activities wherever is optimal for production costs Trade-off: in theory offers both cost reductions and high local responsiveness

coordination costs

a function of the number, size, and types of businesses that are linked

related diversification: constrained

all businesses share competencies

Standard operating procedures are used by firms to enhance inter-operability of different teams' outputs in the organization, which of the following is a disadvantage of using standard operating procedures?

can be rigid and lack flexibility for team to respond differently according to the situation

Drivers of corporate strategy decisions

core competencies, economies of scale, transaction costs

cons of vertical integration

costs of setting up internal production; may reduce quality by producing internally rather than buying from experienced producers; reducing flexibility because of fixed investments in facilities; increases internal complexity facing managers

demand forecasts

determine how many and what types of people are needed

job analysis

determine what should be done on each job and skill needs of (potential) employees

Which structure is this example following? : "A restaurant chain with different departments running all operations in different regions of the country"

divisional form

standard operating procedures

formal rules etc. standardize what is done to enhance interoperability in the in the organizations, but can be rigid and stifling

Which structure of organization does this risk fall under: "A focus on own functional outputs leads each department to focus less on the organizations' core outputs because there is less clear department ownership of product lines"

functional organization

which structure of organization does this advantage fall under: "Greater economies of scale from managing resources at organization"

functional organizational structure

when can divisional structure have advantages

if lower overlap in knowledge/resources relative to need to respond to product/customer/geographic differences

industry life cycle order

introduction, growth, shakeout, maturity, decline

An organization in a dynamic environment needs to speed up information processing across departments in the organization, which of the following is the best option?

invest in formal information management systems that can be rolled out across the organization or improve horizontal relationships across teams to foster information flaws

Foreign direct investment

investments in value chain activities abroad

reconciling supply and demand

know where to find the people you need to fill gaps

pipeline business

linear transformation through the value chain

Transaction costs

lower costs associated with costly or complex negotiations with other parties

pros of vertical integration

lowering costs by not having to negotiate with sellers; greater control over processes and quality; facilitating scheduling and planning; securing critical supplies and distribution channels

Mutual adjustment as needed between units

maximizes flexibility, but increases time spend managing coordination rather than carrying out tasks to deliver on work

core competencies

monetize assets/strengths in multiple markets

Three core characteristics of innovation

novel, useful, implemented

Span of Control

number of subordinates reporting to a manger

Influence costs

occur due to political maneuvering by managers to influence capital and resource allocation and the resulting inefficiencies stemming from suboptimal allocation of scarce resource

Economies of scale/scope

share key value chain activities

effective training

skills training should be specific and tailored to the task knowledge and skills needed in specific job roles and employees' skills gaps

related diversification: linked

some businesses share competencies

A firm is thinking about how to flatten its hierarchy, which would entail middle managers taking on more responsibilities. What would be a reason to limit how many subordinates middle managers have.

subordinates work is complex and hard to evaluate; subordinates need support carrying out array of complex tasks; difficult to group subordinates that have similar jobs and performance criteria

Corporate strategy

the decision about which industries/markets to compete in and how to allocate resources in support of these efforts

Corporate scope

the range of industries/markets the firm is active in

Which structure of organization does this downside fall under? : "Need middle managers to spend more time communicating with each other over employees"

this is a downside to adopting a matrix organizational structure

The chasm in the growth curve

to cross he chasm you need to demonstrate the products value to people who aren't tech enthusiasts, weigh pros and cons of purchasing decisions and rely on others' endorsements

labor supply forecasts

what is the size/quality of current employees and where can you find an external supply of workers

multinational

when a company has local country-led operations in each market

global standardization

when a company sells the same product in different markets, but locates specific value chain activities in lowest cost location Tradeoff: higher cost reductions but lower local responsiveness

when can functional structures have advantages

when there is greater overlap in knowledge/resources relative to need to respond to product/customer/geographic differences

Coordinating by plan

when units agree common goals and points of integration in advance and work separately to deliver agreed deliverables

Geographic scope

where should the company compete geographically in terms of regional national or international markets

Divisional organizational structure

- Each division manages full range of necessary tasks (ex. each division A, B, or C has operations, marketing, and finance,) - may be based on product, customer, geography

advantages of global strategies

- access new sales markets access lower-cost inputs - labor, raw materials at lower cost - access new knowledge - access ideas in other locations to enhance competencies

Challenges of matrix structure

- authority and accountability can be difficult to define with dual lines of control - stress for employees managing competing demands across managers - teams from different parts of organization may need more time to build effective working practices with each other - functional and product managers in matrix need to collaborate to effectively manage employees (can increase workload if direct reports are working in multiple matrix teams)

incremental innvoation

- builds on established knowledge -results from steady technological improvement - typically driven by incumbents improving or expanding on existing products - new oreo/ coke flavors, new stain remover in tide

cultural globilization

- consumer needs and preferences are increasingly covering - makes it more profitable to sell overseas (fewer uncertain/costly product adaptations needed)

multinational enterprise

- deploys resources and capabilities in two countries or more - many different models of multinational enterprises - trade-off in control over local operations vs. cost investments in country - trade-off between local customization vs. cost savings from global-scale production

Functional organizational structure

- each type of task is assigned to and carried out by functional specialist sub-organizations (instead of having separate divisions there are no divisions and goes straight into functional tasks)

Benefits of functional structures

- economies of scale and scope from activities at organization level - greater scope for specialization of employee's knowledge and tasks

platform business

- enables interaction between users - both producers and consumers - overarching purpose is to enable matches among users - provides infrastructure and sets governance conditions - may be based on a technological or business model innovation

Challenges of functional structure

- ensure focus on own functional outputs doesn't lead to less focus on the organizations' core outputs - need to encourage communication channels across functions -management must coordinate effectively across functions to prevent tasks falling in gap between functional responsibilities - can be more difficult to set and evaluate performance targets for each function

Architectural innovation

- existing technology leveraged to create a new type of product - known components, existing technology, used in a novel way - sony Walkman, canon photocopier, netflix

global strategy

- gain and sustain a competitive advantage - access new customers

matrix organizational structure

- hybrid structure distinguished by two chains of authority - product and functional structures overlaid - brings functional experts into project teams - an be reconfigured more flexibility as needed

Geographic scope diversification

- increase in variety of geographic regions - regional, national, or international markets

Horizontal product diversification

- increase variety of products/services sold to customers in a market - increase number of product markets in which the firm is present

disadvantages of global strategies

- liability of foreignness - reputation is one of a firm's most valuable resources - loss of intellectual property

pipeline business

- linear transformation through the value chain e.g. design a product, manufacture it, market it, sell it

matrix structure advantages

- link expertise across organization, fosters communication and information transfer, builds internal ( informal) networks

challenges of divisional structure

- lower economies of scale/scope with some duplication of activities -difficult to coordinate and exchange information among product lines -managers being judged on bottom line ca lead to intense rivalry and competitions -more employees/managers work as generalists across wider range of activities

Benefits of divisional structures

- managers focus on a particular product line, customer, or geography - can build up knowledge of what matters to customers - easier to assess divisional performance - can take whole view and develop long-term strategies - more control over product/customer/geography means they can act faster

evaluating performance

- need to ensure fair, objective standards - challenging - want to eliminate subjectivity and bias by focusing on measurable criteria - what is measurable gets measured and what is measured gets done and so other important aspects of work get ignored

Radical innovation

- novel methods and materials - targets new markets with new technology - smartphone, bluetooth, coffee pods

Mixed functional-divisional

- some tasks assigned to product divisions, some to functional groups depending on nature of tasks e.g. economies of scale and scope in secondary activities vs. need to be focused on product and customer

international

- when a company sells the same products and services in both domestic and foreign markets Trade-off: more product control but lower cost reductions/local responsiveness. less ability to customize product to local conditions

What are the two fundamental problems of organizing

1. Division of labor 2. Integration of Effort